What exchange rate would be used to report each of accounts

Assignment Help Accounting Basics

Reference no: EM131900345

Problem

Lancer, Inc., starts a subsidiary in a foreign country on January 1, 2014. The following account balances for the year ending December 31, 2015, are stated in kanquo (KQ), the local currency:

Sales	KQ	340,000
Inventory (bought on 3/1/15)		187,000
Equipment (bought on 1/1/14)		88,000
Rent expense		22,000
Dividends (declared on 10/1/15)		30,000
Notes receivable (to be collected in 2018)		50,000
Accumulated depreciation-equipment		26,400
Salary payable		7,800
Depreciation expense		8,800

The following U.S.$ per KQ exchange rates are applicable:

January 1, 2014	$ 0.33
January 1, 2015	0.38
March 1, 2015	0.39
October 1, 2015	0.41
December 31, 2015	0.42
Average for 2014	0.34
Average for 2015	0.40

Lancer is preparing account balances to produce consolidated financial statements.

a. Assuming that the kanquo is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

b. Assuming that the U.S. dollar is the functional currency, what exchange rate would be used to report each of these accounts in U.S. dollar consolidated financial statements?

Reference no: EM131900345

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